PSA cuts 8,000 jobs and closes Paris plant to end losses image

PSA Peugeot Citron has announced that 8, 000 jobs will be cut and the facility near Paris, the Aulnay plant, will be closed, in order to end losses.

According to the French based automaker, 8,000 people working for PSA will lose their jobs and the Aulnay facility, near Paris, which is employing 3,000 workers, will be shut down in 2014 as a part of reorganizing Peugeot domestic production capacity which is under-used. Besides the plant near Paris, a second one, in Rennes, western France, will shed 1,400 of its 5,600 jobs because of weak demand of cars like the Citroen C5 or Peugeot 508.

“I am fully aware of the seriousness of today’s announcements. The depth and persistence of the crisis impacting our business in Europe have now made this reorganization project indispensable”, said Philippe Varin, chief executive, in a statement.

The Aulnay plant will be converted for other activities and it get new positions in the group for about half its workforce. These measures have been taken after last year, the company has announced that 6,000 jobs, including 2,500 external positions at subcontractors and service providers will be cut down, so a total of 14,000 people working for PSA, Peugeot Citroen, directly or indirectly, will lose their jobs.

Peugeot said that it will post a net loss in the first half and a 700 million euros operating loss in the carmaking division. The Paris-based Peugeot has posted, last week, a 13 percent decline in the first half sales to 1.62 million light vehicles, more than Renault (3.3%) and Volkswagen (10%). Peugeot’s shares have risen 2 percent in early trading on Thursday after the stock has plunged 32 percent this year, “stealing” 1.2 billion euros of the automaker’s market value.

The job cuts by PSA were severely criticized by the Social Affairs Minister Marisol Touraine, who said that it’s “unacceptable” from a company that benefited from billions of euros in state support to announce these drastic measures.

“We cannot accept something like this”, as she said on Europe 1 Radio. “We have to look at this, to analyze it. This is money which was disbursed without any return, which is not acceptable. The state is going to look at the company’s strategy and what should be demanded in the interest of its workers. This is a study which will take two weeks… There will be a meeting at the end of the month”.

Besides “convincing” the Social Affairs Minister, Peugeot must reassure France’s new president, Francois Hollande, that the job cuts are a necessary response to the crisis.